[princetontiger]

This only works for liquidity events.

Think about it.

No management fees are being charged; only performance fees.

I'm not in the VC business, but there are a lot of investors who are going to be very, very hurt in the next couple years once consumer technology valuations crash. On the other hand, this move may let the party last a bit longer.

Too many people are chasing companies believing the investment will lead to a 10x or 100x return. But, investing in unprofitable businesses is quite different than publicly traded investments and private equity investments.

[arbuge]

In that sense, it puts the syndicate organizers in the same boat as the investors. As you point out, VCs can get quite comfortable off management fees without making investors a dime.

[princetontiger]

Agreed

I am in the hedge fund industry, so I see this first hand.

The media loves the "2&20" phrase, but fund managers now proffer lower and lower management fees in order to close funds.

Most of the top hedge funds charge 1.50% today, and newer funds bear lower management fees.

[antr]

Agree. I've even seen some top funds with lower management fees, but it is very very tough to get in as an LP.

[7Figures2Commas]

> ...but there are a lot of investors who are going to be very, very hurt in the next couple years once consumer technology valuations crash.

Completely agree, and I think some of the hardest hit will be individuals who fashioned themselves as angel extraordinaires as they didn't even capture management fees.

At least investors chasing yield in the bond and public equity markets the past several years will be able to say that they enjoyed their dividends and distributions. Many of these angels will have next to nothing to show for their investments when all is said and done. On second thought, I guess they'll be able to say that they helped Ruby on Rails and Node.js rockstars make their San Francisco rent payments.